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Research and Development (R&D) Credit: Appointment of expert to assist in audits

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Revenue have recently released a manual setting out the Revenue procedure for appointing and briefing an independent expert to assist in evaluating the science test in R&D tax credit audits.

By way of background, each year, Revenue’s Incentives unit places an advertisement on the public procurement website, www.etenders.gov.ie1 , inviting applications for placement on a panel of experts to advise in relation to claims for tax credits in respect of incremental expenditure incurred wholly and exclusively on R&D.

Applications for membership of the panel will be accepted at any time during the year. In order, to be eligible to apply for a place on the panel, individuals must hold a relevant PhD or experiential equivalent. Where an independent expert is required in a field that is not represented on the panel formed from the above process, the Incentives unit will identify suitable experts and approach them with a view to their joining the panel.

The appropriate timing for appointing an independent expert will vary from case to case. In some cases, it will be necessary to appoint an independent expert at the outset of a review while in others one may only be required where Revenue and the company reach an impasse in relation to an aspect of the science test.

Independent experts should not be engaged to explain the science: they should only be engaged where there is a doubt that the science test has been met.

Full details of the manual and procedure can be found here

 

 

Banking supports

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Micro Finance Ireland

If your business is impacted or may be impacted by COVID-19 resulting in a reduction of 15% or more in actual or projected turnover or profit, AND you are having difficulty in accessing  finance from commercial lending providers, the MFI COVID-19 Business Loan may be able to help your business.

In addition, Local Enterprise Offices in every county provide a range of business supports for micro- enterprises including business continuity and preparedness advisory supports connected to the  COVID-19 outbreak. Contact your Local Enterprise Office for more information.

Eligibility

  • Any business (Sole Trader, Partnership or Limited Company) with less than 10 employees and annual turnover of up to €2m
  • Not in a position to avail of finance from Banks and other commercial lending providers
  • 15% of actual or projected turnover or profit is negatively impacted by COVID-19

Product Features

  • Loans from €5,000 – €50,000
  • Supports businesses who have been impacted negatively by coronavirus in Ireland
  • Loan terms typically up to 3 years
  • Up to 6 months Interest only payments
  • No fees/no hidden costs/charges
  • Fixed repayments/no penalty for early repayment

Application process

Application documentation can be found at this web address – https://microfinanceireland.ie/loan-packages/covid19/

  • Complete application form
  • Prepare monthly cash flow forecast for 12 months
  • Complete Micro Finance Ireland Business Plan
  • Submit six months bank statements and in the case of a Limited company six months bank statements for Directors and Shareholders holding 25% or more of the issued share capital of the company.
  • For Limited company applicants only – A central Credit Register report for each Director and for any Shareholders holding 25% or more of the issued share capital of the company.

Strategic Banking Corporation of Ireland

The Department of Business, Enterprise and Innovation announced a number of supports for businesses facing challenges being presented by the current Covid-19 situation. The Credit Guarantee Scheme is in place and available now to SMEs subject to the relevant terms and conditions. Separately the SBCI is currently working to finalise the terms and conditions of the SBCI COVID19 Working Capital Scheme and the eligibility application process for this. The SBCI website will be updated as soon as these are finalised. In the interim if you wish to be kept informed on developments please email the SBCI at info@sbci.gov.ie

SME Credit Guarantee Scheme (CGS) 

The Scheme aims to assist viable SMEs, which under normal lending criteria are unable to borrow from their bank, in accessing credit. The scheme operates by providing an 80% guarantee to participating finance providers (currently AIB, Bank of Ireland and Ulster Bank) on qualifying loans to SMEs.

The Scheme is operated on behalf of the Department of Business, Enterprise and Innovation (D/BEI) by the Strategic Banking Corporation of Ireland (SBCI) and is available from the participating banks (AIB, Bank of Ireland and Ulster Bank). If you are an SME,  you can approach any one of the participating banks and apply for a loan facility under CGS.

Key Features of the Scheme:

  • Facilities of €10,000 up to €1m
  • Terms of up to 7 years
  • Term Loans, Demand Loans and Performance Bonds

 

Who is eligible for the Scheme? 

SMEs may be eligible if they:

  • Are involved in a commercial activity
  • Are a sole trader, partnership, franchise, co-operative or limited company
  • In the lender’s opinion have a viable business proposal
  • Are able to repay the facility

 

How to apply do for the scheme

The scheme is available through participating lenders AIB, Bank of Ireland and Ulster Bank at the web addresses below:

AIB : https://business.aib.ie/products/finance-and-loans/credit-guarantee-scheme

BOI : https://businessbanking.bankofireland.com/credit/credit-guarantee-scheme/

Ulster Bank : https://digital.ulsterbank.ie/business/loans-and-finance/alternative-financing.html

 

Allied Irish Bank (AIB)

AIB’s Covid 19 supports are available at this web address – https://aib.ie/covid19

The financial supports include the following

Cashflow products available to customers and web address for applications

Business Credit Line – https://business.aib.ie/products/finance-and-loans/business-credit-line?_ga=2.155766331.160936585.1584353997-1581556376.1584353997

Farmer Credit Line – https://business.aib.ie/products/finance-and-loans/business-credit-line?_ga=2.155766331.160936585.1584353997-1581556376.1584353997

Promptpay – https://business.aib.ie/products/finance-and-loans/promptpay-and-insurance-premium-finance?_ga=2.146517556.160936585.1584353997-1581556376.1584353997

Business loans of between €2,000 and €60,000 can be applied for on line at this web address : https://business.aib.ie/products/finance-and-loans/business-loans?_ga=2.185208617.160936585.1584353997-1581556376.1584353997

Customer in Difficulty (Forbearance Requests)

AIB have a number of possible solutions available depending on your circumstances

  • Capital Moratorium
  • Capital and Interest Moratorium
  • Covenant Waivers

AIB Advisors are available in branch or on the phone 1890 478 833

 

Bank of Ireland

The supports offered by Bank of Ireland are as follows:

  • Emergency working capital, prioritising loan decisions for impacted customers, payment flexibility on loan facilities, and the provision of trade finance and foreign currency products to support sourcing products from new suppliers internationally.
  • Customers who are concerned about the impact of COVID-19 on their business are encouraged to make contact with their Business Relationship Manager or ring 0818 200 348.
  • Bank of Ireland sectoral experts – in agriculture, manufacturing, hospitality, health, food and beverage, and retail convenience – are also available to support customers.

A full listing of supports from BOI are at this web address: https://businessbanking.bankofireland.com/covid-19/supports-for-businesses/

 

Ulster Bank

Ulster Bank have introduced a financial assessment that is designed to evaluate your financial situation and to offer support where you need it most.

Specially trained staff will carry out a financial review. They will review your current financial situation and take you through the repayment options available. These options include:

  • Extending loan terms
  • Temporarily moving to interest only payments
  • Reduced payments on a temporary basis
  • Postponement of monthly repayments for a defined period of time

A full listing of supports from Ulster Bank are at this web address: https://digital.ulsterbank.ie/personal/help-and-support/struggling-financially.html

 

Covid-19

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It is currently impossible to avoid the news of the Covid-19 epidemic at the moment as the situation unfolds rapidly and becomes an increased risk of becoming a global pandemic. A pandemic is an issue that we in this country would be unlikely to have prepared for in a business sense and as a result we may see this virus affect our business landscapes in ways we may not have expected. As cases begin to grow in number and community transmission begins to become more apparent, it is important for businesses to have a plan in place for keeping their employees safe.

The Government have recently published an income support and economic stimulus package which outlines the following main points for companies who may find themselves on lock down or needing to self-isolate their staff or work from home or to reduce economic impact:

  • The 6 waiting days for sick pay with a medical cert will be waived.
  • The means test requirement for Supplementary Welfare Allowance for medically certified self-isolation will be removed.
  • Self-employed individuals will now be entitled to receive either illness benefit, or non-means tested supplementary welfare allowance.
  • A €200million liquidity support fund will be available for impacted firms.
  • The existing systematic short time working scheme is available for employees who may be placed on reduced working arrangements.

On a more global scale, it has been reported that businesses worldwide are changing and adapting practises to better cope with Covid-19. Many companies in Ireland, the United Kingdom and the United States have immediately implemented travel restrictions or a work from home policy for the foreseeable future in order to avoid community transmission within the office space. Unfortunately, these issues will naturally cause service issues for some.

From looking at the China model which involves the businesses who were first hit and continue to deal with the fallout of the virus, a few key pointers for other businesses worldwide have been outlined:

  • Plan ahead but be prepared for the need to be adaptable as the situation develops.
  • Keep employees informed consistently so that they feel safe and protected.
  • Relocate labour where possible. In situations where employees can work from home to prevent community transmission this can be effective as well as social distancing practises in roles that can not be completed at home.
  • Utilise social media and shift some operations to an online system where possible.
  • Prepare for recovery be it fast or slow moving.
  • Look for the positive points and identify where your business can improve in the face of adversity.
  • Use the situation to become more innovative and embrace innovation within your business and your employees. Thinking on your feet is essential in such a fast moving constantly unfolding landscape of change.

This will undoubtedly be a period of unease and difficulty for many on both a business and personal level, but through following the appropriate guidelines we can endeavour to keep all feeling safe.

 

Euro Currency

The National Minimum Wage Increase

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On the Up

As of February 1st, 2020, there will be an increase in the National Minimum Wage for employees over 20 years of age. The minimum wage for these workers has increased from €9.80 to €10.10 with immediate effect. It is advisable that you notify all employees currently receiving a minimum wage of this change before their next payslip to ensure that they know this change will be in effect immediately.

For all workers under the age of 20, there will also be an increase in line with the minimum wage guidelines. These new rates will be as follows:

  • Employees under the age of 18: €7.07 per hour.
  • Employees aged 18: €8.08 per hour.
  • Employees aged 19: €9.09 per hour.

Regina Doherty of the Department of Social Protection has said of the increase:

“Since 2016, a minimum wage employee working a 39-hour week has received a gross pay increase of €2,331. Since 2015, we have increased the minimum wage by 13.2% ahead of the rate of inflation.”

There is still a way to go before we are on par with the current living wage estimate of €12.30 per hour, but any increases are of course a step in the right direction for low-income workers and their families with our ever-increasing cost of living as we continue to see working people living under the poverty line. Chief Executive of Social Justice Ireland has stated that Ireland has one of the highest rates of low-paid employment in the OECD (The Organisation for Economic Co-Operation and Development).

It is also advised that in light of these increases, employers should take a look at their current rates for Sunday work as legislation states that employees should receive reasonable compensation for this work, whilst the amount is not specified it is suggested that a 25% premium may find its way into legislation and it may be wise to follow this template going forward.

Should you have any concerns or queries on any business or financial matters, please don’t hesitate to contact us here at EcovisDCA where we are always happy to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

Pensions – it really is a case of Fail to Prepare…

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Something we are told from a very young age is that it is never too early to start planning for the future. As true as this may be it is something that falls largely on deaf young ears as we move on with our lives without thinking about that distant future of our elders. As you progress in your working life, this statement becomes increasingly true as no matter what stage of your career you are currently at, it is vital to plan for a future in which you will no longer be earning.

Recent reports show that the majority or workers are not saving towards a pension for their futures. As we have discussed previously, the cost of living, renting and buying property continues to grow so it should come as no surprise that many workers find themselves unable to set aside money for distant days ahead as wallets get increasingly light. There has been a lot of speculation recently that we may be heading towards a time-bomb in terms of pensions, so the news that only 47% of workers are contributing to a pension only compounds this fear and places the future of the State pension in question.

There have been discussions that the Government is to roll out a mandatory scheme for pensions by 2022, but this still leaves a period of 3 years during which workers could take matters into their own hands and begin making contributions. Perhaps unsurprisingly, it appears that the worst uptake in pension contributions is among younger workers, who again are most likely to be stuck in the rental trap at present. Social Policy Officer with The Irish Congress of Trade Unions, Laura Bambrick has said that too little is being done to encourage lower- and middle-income workers to contribute.

“Tax relief has failed as a policy instrument for encouraging low and middle-income earners to save enough towards a financially secure retirement, and there is no legal obligation on an employer to provide or contribute to a pension scheme for employees.”

Funding issues for State Pensions are likely to become an increasing concern for the future if pension contributions don’t soon become a standard, and with many employers also not making any contributions for their employees, something likely must change and urgently.

If you are interested in beginning your own pensions journey, here are some tips from us.

Calculate:

As with any budgeting system, it is essential to first work out how much you need to be setting aside. There are a great many online calculators that can assist with this. It is also important to consider your own currently monthly budget.

Shop Around:

There are so many options to choose from that this can be daunting but take the opportunity to speak to some advisers and ensure that you find the right pension plan for you.

Speak with your Employer:

It is possible that your employer may be willing to match your contributions or make some contribution for you, it is important to find out if this is a possibility in your company.

Tax:

If there are tax breaks available, be sure to make use of them.

Save:

There are many small ways to make weekly savings, implementing these may mean that your pension contributions do not leave such a gaping hole in your pocket.

Should you have any concerns or queries on any business or financial matters, please don’t hesitate to contact us here at EcovisDCA where we are always happy to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

The Help To Buy Scheme for First Time Home Buyers

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A Helping Hand onto an Elusive Ladder

We have spoken at length in the past about the multitudinous issues facing prospective first time home buyers in our current climate in Ireland. From saving deposits amidst paying skyrocketing rents, to being effectively written out of the narrative due to stricter borrowing rules and increasing home prices across the country. As a result it was recently reported that owning their own home has become more of a distant dream for many, rather than a feasible option for the future, with many saying that it would take them many years to save a deposit and even then they may not be able to afford the costs on current salaries. Rather than sticking with the unpopular opinions of recent months, of giving up avocado toast and living on your parents couch while asking for a loan of €30,000 we decided that today we would take a look at the more positive side of being a first time or prospective first time buyer. Believe it or not there are some options available to you out there, and we hope that access to these may make your dream more of a reality.

We all know about the all-important 10% deposit required to get your foot onto the first rung of the property ladder, as well as the additional funds required on top of these for legal costs etc. As mortgage relief is no longer an option, this all adds up quickly and when paired with every increasing house prices which don’t seem inclined to start falling any time soon, can lead to a number of hopeful buyers who simply cannot afford the costs. Whilst seeking a loan from a local authority may be an option for some, there is still the matter of a deposit to be raised and countless costs to be taken into account. The recent installation of the Help to Buy (HTB) Initiative may be a saving grace for some buyers, and has already helped many families find their new homes.

Essentially, the Help to Buy (HTB) scheme is an income tax rebate scheme now in place in order to help first time buyers buy new or self builds, and does not apply to second hand dwellings. This scheme allows buyers a rebate of their income tax paid over the previous 4 years as well as a refund of DIRT and will run until the end of 2019.

Naturally there are a number of stipulations on this as follows:

  • You must take out a mortgage of at least 70% of the cost of the property.
  • Applies only to properties costing €500,000 or less.
  • Applies only to new builds.
  • You must occupy the property for 5 years or more from the date it is habitable.
  • You must be fully tax compliant for the 4 years prior to your claim, complete a tax return form (Form 12) and pay any outstanding taxes that may be owed.
  • PAYE employees can apply using Revenue’s My Account system whilst self-assessed employees will apply through Revenue’s online system (ROS).

Should you have any queries or require further information on this or any other business or financial matter please don’t hesitate to contact us here at EcovisDCA’s new head office, where as always we will be delighted to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

Should You Fix Your Mortgage Rate?

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Keeping that Roof above Water

We have spoken recently about the struggles facing prospective homeowners and their long term range of effects on the market at large. Something we haven’t touched upon thus far is the struggles facing those who already have a foothold on the property ladder, existing homeowners currently holding a mortgage. Whilst this may seem like the ideal status for those struggling to buy their first home, there are of course issues which apply here that may not be considered.

It has been reported recently that homeowners could see a marked increase on their mortgage bills in years to come. This is due to the fact that European interest rates are set to begin to rise from 2019 to 2020 as the European Central Bank is expected to increase its main refinancing rate. Depending on the rate of mortgage and the loan size, this could see mortgage payments possibly increase by a couple of hundred euro.

These European interest rates have been at a stable low for many years, with many homeowners likely to not have experienced excessive rises in their time. In the atmosphere of uncertainty as we wait for the confirmation of these changing rates, what action can be taken either on new or old mortgages to limit the amount of damage to your pocket?

Fix it Up:       

A fixed rate mortgage can often seem like the most expensive option on the surface when choosing your mortgage, but can be quite the saving grace at times like these when rates are in flux as this option fixes your mortgage rate at one price for a certain period of time.

Whether choosing your mortgage or switching, a fixed rate might be the perfect option during these uncertain times and may offer you a slight buffer.

Pay, Pay, Pay:

Although it can be tempting when funds are low to take out further loans to replenish emptying pockets, this is likely to be damaging in the long run as your repayments begin to stack up. Instead of this, it is advisable to keep your mortgage payments up to date, and even overpay whenever possible in order to reduce your overall term.

In addition to this, clearing off any other debts you may have from loans or credit cards is advisable as the goal is to reduce your monthly repayments to as few as possible, with your mortgage being the ultimate priority. This will avoid you paying higher interest rates on other loans as well as your mortgage.

Should you be in a position of struggle when these rises come into play, be sure to discuss with your provider and solicitor options for restructuring your mortgage in order to avoid any long term issues.

Should you have any queries or require further information on this or any other business or financial matter please don’t hesitate to contact us here at EcovisDCA’s new head office, where as always we will be delighted to help.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

Knock Knock Knocking on Overpriced Doors

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We have spoken many times in recent years about the difficulties faced by prospective home owners, whether they be first time buyers or otherwise. The mortgage rules currently in place in Ireland can no longer truly be called ‘new’, and are unlikely to be changed drastically but continue to place heavy restrictions on prospective buyers. Recent reports suggest that it may in fact be keeping many prospective buyers off the property ladder permanently, if not delaying the process by as much as a decade.

A large part of the issue seems to exist independently from the mortgage rules, while house prices have risen exponentially in recent years (and are forecast to continue to do so for at least three more years with the possibility of reaching a housing bubble due to lack of supply to meet demand), the cost of renting has followed suit, meaning that many prospective buyers find it increasingly difficult to save the required 10% deposit due to both rental costs and the overall cost of the house they wish to purchase placing increased pressure on the hopeful buyer. A recent report by Threshold has found that of those surveyed, less than a third are happy to be renting. 71% of those surveyed are currently renting due to not being able to afford a mortgage in the current market. Similarly, it was found that 96% of tenants have found it incredibly difficult to find appropriate and affordable rental accommodation due to the increasing costs which often see families spending between one third and one half of their take home pay on rent. Many tenants have been renting for in excess of five years due to the lack of other options available to them.

Chair of Threshold Dr. Aideen Hayden has been quoted as saying the following about the current rental crisis:

“A home is not just where you live, it is a place of sanctuary, offering protection from the stresses and strains of daily living. The current insecurity for tenants in the private rented sector means that they can’t look ahead and plan, they can’t put down roots.”

Whilst demand for housing strongly outweighs supply currently, it has recently been speculated by Savills that the trend in supply is turning upwards which may lead to a more balanced market by 2021, meaning that there is still space for some good news in the future for prospective buyers.

Should you require any assistance or guidance on any business or personal finance matters, please do not hesitate to contact us here at EcovisDCA where we are always happy to help.

Remembering the Importance of Saving

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Don’t Break the (Piggy) Bank

As January gets into full swing and we all settle back into the daily grind of working life, some of our New Year resolutions may be left behind or pushed aside in favour of those resolutions promising more longevity or better return of investment. High on people’s lists of resolutions is often the vow to save more money in the coming year. Whilst the increasing cost of living might make this quite a difficult task, it is often one of the most rewarding resolutions as the results can be clear to see. We have spoken recently about some of our top tips for saving in the New Year, and it seems like you will not be alone in your savings endeavours.

The Bank of Ireland Savings and Investment Index, published on 15th January shows that over half of Irish consumers were regularly saving during the December period. December is of course a rather difficult time for savings, and this sentiment was also reflected in the findings. Tom McCabe, global investment strategist with Bank of Ireland Investment Markets was quoted as saying:

“”Irish sentiment towards savings and investments eased in December mainly as a result of a weaker outlook for the savings and investment environment. This may be temporary given recent trends in the index but could also be an early indication that savers are looking for better returns on their money and are willing to consider alternatives to their savings account.”

This shows that although Irish consumers are continuing to save, there is a lingering fear that savings are no longer generating enough of a return in their traditional savings methods. This may see a shift in the Irish market towards investments rather than traditional saving. The Index found that 34% of Irish consumers also invested regularly during the month of December, much like the savings findings this could be either temporary or indicative of a new trend in Irish savings.

Hinting towards this being a possible new Irish trend is the fact that investments were more prevalent in the younger generation with 39% of under 50s regularly investing whilst only 26% of over 50s were found to be investing during the same period. Perhaps unsurprisingly, investment numbers were higher in November than December, which is to be expected as December is often a month in which consumers have less disposable income.

These findings also found that the Irish population have a strong preference towards saving should they encounter any windfall gain, but also a new move towards considering investments with windfall amounts.

Should you require any help or guidance on any savings, investments, business or personal finance matters please don’t hesitate to get in touch with us here at EcovisDCA.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY

Bad Investment Makes no Cents.

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We have spoken at length in the past about various forms of funding and investment in business and the importance of the availability of funding for all businesses in particular small and medium enterprises who may rely on outside funding. Something which is rarely touched upon is the importance of choosing the right investor for your business, and one which can go the distance alongside your company. Failure to choose a sustainable investor can cause serious problems for both your business and the investor.

This issue is especially important this week as it was revealed that many Irish investment firms have been found to have failed to meet the required standard of investors by the Central Bank of Ireland. The bank recently conducted a review of suitability requirements for investment firms and found many companies to be sorely lacking, which is not encouraging news for business owners wishing to secure funding. Michael Hodson, Director of Asset Management has been quoted as saying of the findings:

“The review highlighted that firms need to improve the quality of information collected and how this information is utilised in the suitability process. With the introduction of higher suitability standards, the quality of the information collected is all the more significant.  Boards are reminded that they are responsible for implementing an appropriate governance framework that meets the suitability regulatory requirements and embeds a client-centric culture across the firm.  Investor protection is at the core of the Central Bank’s mandate.” 

The review found that many firms were unable to demonstrate that the required suitability policies and procedures were implicated whilst also pointing out that many application forms were incomplete. Some firms were also found to be reliant on self-assessment alone and had little to no tools in place for assessing suitability for investment, relying heavily on technology. In perhaps the most worrying finding, many companies were found to have nothing in place for dealing with potentially vulnerable clients and companies.

Thankfully, the Central Bank assure companies that in any areas that the findings may be damaging to consumers formal supervisory requirements have been implemented which should reduce risk greatly for prospective clients.

As always we are available for any advice or guidance you may require on business or finance matters.

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~ DCA PARTNERS, DECLAN DOLAN & EAMONN GARVEY